JetBlue Airways Corporation (JBLU), US Airways Group, Inc. (LCC): Two Airliners for the Long Haul

Management made the right choice in getting out in front of the E190 problem, and the long-term growth plan appears to be roughly on track. Earnings will have some trouble over the near term, but long term this is a great growth opportunity. This airline has the fundamentals down pat: cheap fares, great customer service, and a customizable experience.

Another intriguing play

US Airways Group, Inc. (NYSE:LCC) doesn’t have JetBlue’s growth prospects, but it might present an excellent opportunity to a value-oriented investor. The P/E ratio for the trailing-12 months is a stunning 6.5, with a forward P/E of just 4.5. The airline is entering a merger with bankrupt AMR, parent of American Airlines, which has created a great deal of uncertainty around the company’s future. AMR posted a steady string of losses over the past five years and is (as previously noted) bankrupt.

US Airways Group, Inc. (NYSE:LCC)’ earnings haven’t helped either, with the 2010 EPS clocking in at $2.61, 2011 at $0.44, and 2012 at $3.28. Air travel is a volatile business, and this company has more built-in uncertainty than most. If you’re willing to take a lot of risk, this could be an excellent opportunity to get into the stock. Keep an eye on PRASM (which declined by 0.9% last quarter), continued efforts to contain fuel costs, and the merger.

Foolish conclusion

Buy JetBlue–management is making all the right decisions to assure long-term profitability and great returns for shareholders. US Airways Group, Inc. (NYSE:LCC) is an excellent value play assuming the American Airlines merger and integration are reasonably successful. Delta and United Continental are not in a position that makes me confident in their ability to adapt in the future.

The article Two Airliners for the Long Haul originally appeared on Fool.com and is written by Michael Douglass.

Michael Douglass has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Michael is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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